DULUTH, Ga. -

There was a phrase to describe the status of Q auto — used by an investment analyst during Wednesday’s quarterly earnings call — that Asbury Automotive Group chief executive Craig Monaghan seemed to like.

In the Q&A portion of the call, Rick Nelson of Stephens Inc. asked whether Asbury’s plan was to “nurture these three stores” already in the standalone used-car program’s lineup or at some point, make a decision to “push forward with unit growth?”

“Rick, that word ‘nurture’ … it’s a great term,” Monaghan said. “I would tell you that we’re very much committed to Q. We are still learning. We are experimenting with different things.”

One such idea would be to have a “sub-brand” for the Q auto name tied into Asbury’s various individual regional brands (Coggin, Crown Automotive, Greenville Automotive, etc.).

Getting back to Q auto’s performance, though, the program “continues to progress, in line with our expectations, and resulted in an EPS loss of 1 cent in the third quarter,” Asbury chief financial officer Keith Style said during the prepared portion of the call.

“We continue to focus on our objective of achieving run-rate profitability for Q,” he added.

And as far as that loss goes, Monaghan said in the Q&A: “We think relative to the opportunity that we see there, that’s a small price to pay for what we still believe has very serious upside potential. And we’ll be sticking with it.”

Another analyst asked when “a more substantial change” in the group’s Q auto strategy might happen, inquiring whether Asbury is likely to focus on its existing Q stores for the next six to 12 months and go forward from there, or whether it may shift to opening additional outlets in the next six months.

It’s “hard for us to say” what the timetable might be, Monaghan said.

The retailer is “learning every month” from its work with the Q auto program — whose stores are located in the Florida cities of Brandon, Fort Myers and Jacksonville — and the group is quite committed to it.

“We think we’d be remiss not to continue to work with it. But we’re going to learn as we go,” Monaghan said. “For some of the stores in Florida, now all the snowbirds are coming back, we’ve got a broader customer base. I like Rick’s word: we’re going to continue to 'nurture' it.

“It is not consuming a tremendous amount of capital. We’ve got a great team that’s working on it. We like the progress that we see,” he added.

“We will give you a head’s up if we’re getting ready to open additional stores. We’ll let you know,” Monaghan added. “But at this point we want to just continue with these three while we continue to refine the model.”

Other notes on Q auto from Wednesday’s call:

— Monaghan on potential of Q customers coming back for parts and service: 

“At this point, it’s not a material part of that business. One of the things that we have learned with Q is that when you come out of a box with a brand that never existed before, you’ve got a challenge.

You just don’t have that much recognition, we just don’t’ have that many cars on the road that we sold, so we’ve got a very low unit in operation number. We see that business growing over time … but at this point in time, it’s a very small part of the business.”

— Another analyst asked about the impact of the “peer-to-peer online dealer model,” particularly as it picks up steam and increases transparency around price and gross profits. In terms of developing Q auto strategy, the analyst asked, is that a concern for Asbury? 

“No.We also notice that there’s a lot of activity in the used market, a lot of new entrants. They’re small at this stage of the game,” Monaghan said. “But it’s clearly a market that many others are finding more and more intriguing.

I would go back to one of our fundamental concepts: we send somewhere around 35,000 cars to auction every year. We believe that many of those vehicles end up on our competitors’ lots,” he said. 

“And we would love to figure out a way to retain those vehicles in our systems and retail them ourselves to generate incremental profit. And we don’t think what anybody else is doing online or anywhere else really matters,” he continued.

“We think this is an opportunity that exists within our own system and we’re committed to figuring out how to make that work.”